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China 5G ETF gains $2.85bn in mainland

The rollout of 5G across the country is expected to be delayed, but the passive product from Beijing-headquartered China Asset Management has nonetheless become popular, according to data provider Wind.

The ChinaAMC CSI 5G Communications Theme ETF has become the thematic ETF with the largest cumulative AUM in the mainland, collecting around RMB 20bn ($2.85bn) since its inception in October 2019, according to mainland data provider Wind.

Managed by Li Jun and listed on the Shanghai Stock Exchange, the ETF’s largest exposure is in the manufacturing sector (94.5%), Wind data shows.

The capital inflows come despite the fact that the recent coronavirus scare has slowed manufacturing in China as factories close or try to comply with health regulations. The manufacturing slowdown is expected to have an impact on China’s 5G rollout.

“[T]elecom equipment firms and network operators are grappling with a logistical nightmare as travel and quarantine restrictions cause staff shortages and impede the transportation of goods,” Reuters reported.

Nonetheless, Zhang Hongtao, Beijing-based managing director for China AMC, remained optimistic. “With the advent of the era of data intelligence, China is expected to become a leader in a new round of the global technological innovation cycle,” he said, speaking during an online roadshow on Monday.

“China also has the largest number of electronics consumers while the advancement of 5G construction and the expansion of demand have promoted the performance of listed companies in hardware industries such as the 5G industry chain and semiconductors.

“With the advancement of chip localisation led by Huawei, domestic firms’ substitution [of foreign firms] in the field of technology and hardware continues to increase,” Zhang added.

Investment surge

The coronavirus has not prevented investors from putting capital into desired funds. On Tuesday, the 5G ETF pulled in RMB 4.5bn in one trading day, according to a China AMC spokesman.

Likewise, a mutual fund from mainland asset manager Foresight Fund Management gathered RMB 120bn ($17.14bn) of subscriptions on its first day, which was yesterday, Reuters reported.

China AMC is also promoting two new technology ETFs: semiconductor, and artificial intelligence.

The second and third largest mainland thematic funds are Bosera Yangchuang ETF, with assets of RMB 15.6bn and the Huabao CSI Technology Lead ETF, with RMB 14.5bn, according to Wind.

Separately, 5G investing has also gained popularity in Taiwan. The Yuanta Global NextGen Telecommunication ETF from Taipei-based Yuanta Funds gathered NT$ 9.61bn ($317m) from around 30,000 investors during its initial launch, FSA previously reported.

Part of the Mark Allen Group.